Kuwait Invites In Carpetbaggers

by Sanjay Suri

(IPS) LONDON -- A Kuwaiti bid to help foreign companies looking to do business in Iraq was badly timed. The worst of the recent killings in Iraq came just as the Kuwaitis made their pitch.

Kuwaiti trade and industry minister Abdullah al-Tawil was selling the Kuwaiti route to business in Iraq in London at the time of the suicide bombing at the army recruitment center. Al-Tawil had arrived in London the day earlier from the United States when a blast killed dozens at a police recruitment center.

The Kuwaiti minister led a team that visited Rome, Washington and finally London this week to promise profits in Iraq through Kuwait.

"We want to tell the world that Kuwait is back in business," al-Tawil told media representatives in London Thursday. "Kuwait can be a hub for serious investors or traders to take advantage of the situation developing in the area." The Kuwaiti government and the private sector would "help in every possible way".

Kuwait has been preparing the passage to Iraq for several months now. It has passed laws to allow 100 percent owned operations of foreign banks to set up in Kuwait. Foreign companies have been invited to set up fully owned units with a ten-year tax holiday, duty free imports and clear exit if they want to leave.

The Kuwaiti government has set up a fund close to a billion dollars to assist investors looking for opportunities in Iraq. "But that is not happening due to the security situation," al-Tawil admitted.

What had seemed tempting slices of the Iraq reconstruction cake now appear as forbidden fruit to many businessmen in Kuwait, Britain and the United States. Despite reconstruction contracts awarded to large U.S. companies, most middle level investors are staying away.

Al-Tawil says up to 1,000 trucks are carrying goods into Iraq from Kuwait every day. But there is clear frustration at the lack of investment.

The Kuwaiti tour of the West produced few concrete offers of investment into Iraq through Kuwait. The government team will next head for India and Pakistan, and later China and Singapore.

Al-Tawil has been trying to sell the idea that investment will improve the security situation. "Security will improve when job opportunities become available," he said. "We will see an improvement in security in the next few months."

Kuwait is now seeking to turn its loyalty to the United States into business opportunities for itself.

"We have had a lot of discussions with the Coalition Provisional Authority (CPA) in the United States and the Ministry of Defense in London about opportunities for the private sector," al-Tawil said.

"We are a major non-NATO ally of the United States, and we hope we have preference accordingly," he said.

The Kuwaiti minister met chancellor of the exchequer (finance minister) Gordon Brown and secretary of the Department of Trade and Industry Patricia Hewitt in London. "We want British companies to make Kuwait a hub for trading in Iraq," al-Tawil said.

The Kuwaiti offer comes at a time when Iraq can be the last hope for many British construction companies. Construction orders in 2003 fell four per cent compared to orders in 2002, according to a DTI report published Thursday. Orders in the fourth quarter of 2003 fell by eight per cent compared to the same quarter a year earlier.

"Infrastructure orders in 2003 decreased by 18 per cent compared with 2002," the report says. "Orders in the fourth quarter of 2003 fell by 22 per cent compared with the previous quarter, and were unchanged when compared to the same quarter a year earlier.

British secretary of state for international development Hilary Benn is due to reveal new British plans for the reconstruction of Iraq next week. Benn will set out the department's plans in Iraq over the coming two years with the launch of the Country Assistance Plan for Iraq.

The plan underlines the fact that the British government wants to put public money behind private investments in rebuilding Iraq.

A team of business leaders had asked the British government to ensure before the invasion of Iraq that U.S. companies do not hog the big contracts. British companies have begun to lobby the government again to help them get a secure -- and financially secure -- foothold in Iraq.

HSBC and Standard Chartered Bank have already gained licenses to set up business in Iraq. The National Bank of Kuwait too has won a licence, so have two Kuwaiti mobile telephone companies.

Kuwait sees itself as a part of the larger coalition, and it sees that financial killings can be made in Iraq, if only the suicide bombers would stay at home.